Universities are bracing themselves for bad tidings in the new year regardless of what resolutions they may look to make. But it may not be all doom and gloom, as Education Correspondent Tony Collins reports.

Higher education, once regarded as sacrosant when it came to the funding requirements of the country’s universities, can surely never have been under so much financial pressure and scrutiny.

The recent pre-Budget report from the Government dispelled any lingering doubts or hopes as to the extent of the public spending cuts needed to curb Britain’s spiralling debt.

Universities, even those members of the Russell Group of leading research institutions including Birmingham and Warwick, are expecting to feel the impact of reductions in public sector spending, regardless of who wins the forthcoming general election.

But while the country’s higher education institutions are fearing the worst, some are hopeful that good housekeeping and key decisions made in the past will stand them in good stead.

The University of Warwick is confident of falling into that category, despite no-one knowing what the outcome of Business Secretary Lord Mandelson’s independent review of higher education funding and student finance is likely to be when it reports later next year.

Peter Dunn, Warwick’s head of communications, said: “The whole public sector is likely to face some cuts and reductions in the next few years. All the main political parties are saying the same.

“It wouldn’t surprise at all if we had cuts, not just next year, but the year after that and probably the year after that. Universities are part of the public sector after all.

More than 30 academics are facing redundancy at the university following a decision to close its horticultural research centre, because it was making huge losses.

Mr Dunn added: “The Chancellor said in his pre-Budget review that higher education was facing cuts of £600 million. That is clearly the bad news that universities are facing.

“But the good news is that Warwick has had a range of income streams over the years to the point that, now, roughly 70 per cent of our income we raise ourselves through things such as research fees.”

That is particularly impressive when you realise that the University of Warwick has an annual turnover of more than £300 million.

Mr Dunn added that the university can trace its income diversity back to the Margaret Thatcher era.

“Since the early 1980s, when Mrs Thatcher cut spending, we decided to do something a bit different. We only implemented half the cuts and decided instead to generate money in some other way. And we found we were good at it,” he said.

That diversification saw Warwick create the first of three bespoke conference centres as well as work closely with industry on specific research projects, such as making the latest settings for a car.

“That now means we are better placed for the next set of cuts because we are not as dependent on straight forward Government funding as so many other universities.”

Another institution not having many sleepless nights is the University of Birmingham.

Its Vice-Chancellor, Professor David Eastwood, said: “We have planned prudently so we have anticipated funding reductions and have already started taking action to deal with them.

“We are in a relatively strong position because we have been well managed over the years.”

Birmingham’s ‘action’ has been to “disinvest” in certain areas, in particular where there are issues around research funding. It is presently consulting over the area of Sociology.

But Prof Eastwood points out that Birmingham is one of the few universities still looking to invest.

Such new investment has already included the area of metamaterials, or artificial materials, but he added: “We will be announcing another seven areas of new investment in the new year.

“Universities know there will be funding reductions largely because we are autonomous institutions and have to plan for our own futures.

“But nobody should be under any illusion that if you reduce investment in higher education there are three consequences.

“We will not be able to make the same contributions to the skills agenda, there will be an obvious impact on research, and we are also a major provider of jobs in the region.

“We are aware that not only are there 6,000 jobs directly at the university, but more than that in the wider economy. If we meet the targets that we set ourselves over the next three years, we will reconfigure, but the total numbers will stay as they are, with some posts lost and others coming in.”

Professor Nigel Thrift, Vice-Chancellor of the University of Warwick, said: “University Vice-Chancellors understand that public spending is likely to be constrained for the foreseeable future but that does not mean that we were expecting such a savage reverse Christmas present.

“A £553 million cut is a considerable blow to a sector that is central to economic recovery.

“Our universities are world-leading institutions that generate new skills, innovations and technologies, are drivers of future economic growth, and produce new thinking and hard science that will be crucial to meeting global challenges such as climate change.

“Universities are concerned that these funding cuts come hand-in-hand with what seems to be a series of new regulatory initiatives that seek to prescribe what and how universities should teach and how they should be managed.

“We believe that our universities are valued as responsible and mature institutions whose role in the economy and the cultural life of the nation is well understood. This latest funding letter suggests that that is no longer a universal view.”